The Zambian government continues to step back from nationalisation as it now looks to cut its stake in the once dominant ZCCM Investment Holdings.
Zambia plans to cede control of a company that holds minority stakes in the country’s mines as Africa’s biggest copper producer takes a further step away from an era of nationalisation that began in the 1970s and slashed metal output.
The Southern African nation will probably cut its 87.6% stake in ZCCM Investment Holdings to less than 50%, Mines Minister Christopher Yaluma said on Monday in an interview by mobile phone from Kasama, 650 kilometers north-east of the capital, Lusaka. The Cabinet will decide on the size of the divestment, he said. “We are not looking back, but looking forward and getting the mining houses totally into private hands,” he said. “We have gone past nationalisation and we are not going back.”
ZCCM once dominated the Zambian copper industry as the state mining company following the nationalisation of Anglo American assets in the 1970s. The country began selling the assets in the late 1990s after annual production slumped to 250 000 metric tons in 1998 from 630 000 tons in 1975.
In 1999 Anglo bought back the biggest mines at a time when ZCCM had debts of $800-million. Those assets are now mainly owned by Vedanta Resources.
Nationalisation cost the country an estimated $45-billion in potential income, according to a march report by Eunomix, a research company.
ZCCM-IH holds minority stakes in the local units of Glencore Xstrata, First Quantum Minerals and Vedanta Resources, following state asset sales that began in the 1990s.
Zambia’s mines lost more than $1-million a day under government ownership, according First Quantum, the country’s biggest copper producer. Output of the metal fell 65% to 263,000 metric tons in 1997 from 1973, chamber of mines figures show, before rebounding to more than 800 000 tons last year. Mabvuto Chipata, ZCCM-IH’s chief financial officer, declined to comment, referring questions to chief executive officer Mukela Muyunda. Muyunda couldn’t be reached on his mobile phone outside normal business hours.
ZCCM-IH plans to sell stock to existing shareholders to repay debt to the government and invest in new developments, the Lusaka-based company said last week. The state doesn’t intend to increase its ownership through the exercise, it said.
Most minority shareholders own their stock through the NYSE Euronext in Paris, according to ZCCM-IH, which estimates the company’s asset value at 2-billion kwacha ($387-million).
An independent company completed a valuation of the state-controlled miner in September, and is yet to announce the results of the exercise, ZCCM-IH said in an announcement last week. – Bloomberg